GE gets green light to buy Alstom

September 8, 2015 10:23 AM

General Electric won European Union antitrust clearance on Tuesday to buy Alstom's power unit after agreeing to sell some of the French company's assets to Italian competitor Ansaldo Energia.

The European Commission said the concessions allayed its earlier concerns that the €12.4-billion ($13.9 billion) deal would reduce competition to two major players, namely the merged company and Germany's Siemens.

GE will divest Alstom's large turbine product line and the technology it is developing for very large turbines to Ansaldo, which is 40% owned by Italian state-backed investment fund Fondo Strategico Italiano and another 40% by China's Shanghai Electric.

The U.S. conglomerate will also sell Alstom's service contracts for 34 installed turbines and its U.S.-based subsidiary Power System Manufacturing to Ansaldo.

European Competition Commissioner Margrethe Vestager told a news conference that Ansaldo was already an established player in the heavy duty gas turbine market and, with the addition of Alstom's assets, would be able to replace Alstom's role in the market.

Without this divestiture, Alstom turbines risked disappearing from the market, resulting in less choice and higher prices, with an impact on the cost of electricity, she said.

"It (the merger decision) illustrates that Europe is open for business, you can invest your money here, you can do a very good deal," Vestager said.

Vestager pointed to the cordial ties with her U.S. counterparts working on the case, contrasting it with the turmoil 14 years ago when the Commission blocked GE's proposed $42 billion purchase of Honeywell International despite clearance by U.S. authorities.

"We have gone a very, very long way with transatlantic cooperation since GE tried to acquire Honeywell at the beginning of the millennium. Things have changed."

Reuters reported on Aug. 14 that the GE/Alstom deal would be approved with conditions.

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